The Profitable Connections Of Halliburton

ByPeter Carlson

February 10, 2004

"War is hell," Gen. Sherman said, but the folks at Halliburton have a more nuanced view: To them, war is a helluva good way to make money.

Halliburton is, of course, the huge multinational conglomerate once headed by Dick Cheney. Now, Cheney is our vice president and Halliburton is the largest private contractor for American forces in Iraq, with $11 billion in government contracts. Jane Mayer, a staff writer for the New Yorker, looked into the Cheney-Halliburton story, and her report -- printed in the Feb. 16 & 23 double issue -- is a peek into the cynical world of crony capitalism and war profiteering.

The story begins in the early 1990s, when Cheney -- then secretary of defense in George H.W. Bush's administration -- decided to privatize such military services as preparing food and washing clothes for the troops. Under Cheney, the Pentagon paid Halliburton $3.9 million for a study on how to privatize these services. Then it paid Halliburton $5 million more to do a follow-up study. Then it hired Halliburton to provide these services. In Somalia, Halliburton earned $109 million. In the Balkans, it earned $2.2 billion.

In 1993, Cheney left the Pentagon and, contemplating a run for president, formed a political action committee whose contributors, Mayer writes, included Halliburton's CEO and "executives at several of the companies that have since won the largest government contracts in Iraq."

In 1995, sensing no groundswell of popular support, Cheney decided not to run for president and instead got a real job -- as CEO of Halliburton. The pay was good: In five years, he made $44 million and he still receives about $150,000 a year in deferred pay while serving as vice president.

Cheney had no experience in business, but he had something else that Halliburton needed. "Dick was good at opening doors," Lawrence Eagleburger, former secretary of state and former Halliburton board member, told Mayer. "I don't mean that pejoratively. He had contacts from his former life and he used them effectively."

In 1998, Halliburton bought its main rival, Dresser Industries, thus becoming, Mayer writes, "the largest company of its kind in the world." Among the combined company's customers were some of the world's worst dictatorships, including Iraq.

"The United States had concluded that Iraq, Libya and Iran supported terrorism and had imposed strict sanctions on them," Mayer writes. "Yet during Cheney's tenure at Halliburton the company did business in all three countries. In the case of Iraq, Halliburton legally evaded U.S. sanctions by conducting its oil-service business through foreign subsidiaries that had once been owned by Dresser. With Iran and Libya, Halliburton used its own subsidiaries. The use of foreign subsidiaries may have helped the company avoid paying U.S. taxes."

During the 2000 campaign, Cheney told ABC News that "I had a firm policy that we wouldn't do anything in Iraq, even arrangements that were supposedly legal." But, Mayer writes, "under Cheney's watch, two foreign subsidiaries of Dresser sold millions of dollars worth of oil services and parts to Saddam's regime." Halliburton ended its dealings with Iraq in February 2000, according to Mayer.

In 2000, Halliburton allowed its CEO to moonlight as head of George W. Bush's vice presidential search committee. After a vigorous search, Cheney's committee selected . . . Cheney.

In January 2001, Cheney became vice president and -- according to former Bush treasury secretary Paul O'Neill -- quickly began urging a war against his former customer, Saddam Hussein.

In September 2001, terrorists attacked the World Trade Center and the Pentagon. Soon, the "war on terror" became big business for Halliburton. "The company's commercial ties to terrorist states," Mayer writes, archly, "did not prevent it from assuming a prominent role."

Indeed, the Navy hired Halliburton to build prison camps for terrorists in Guantanamo Bay for $37 million. The State Department hired Halliburton to build a new embassy in Afghanistan for $100 million. And a secret task force picked Halliburton to receive a noncompetitive $7 billion contract to repair Iraq's oil fields.

Since then, as readers of this newspaper already know, Halliburton overcharged the government by $61 million in a gasoline contract and by another $27.4 million in a contract to feed troops in Kuwait and Iraq. And the company recently confessed that two of its employees had taken kickbacks resulting in further overcharges of $6.3 million.

"The day after that disclosure," Mayer writes, "the Pentagon awarded yet another contract to Halliburton, worth $1.2 billion."

Cheney declined Mayer's request for an interview, but his spokesman told Mayer that Cheney "does not have knowledge of the contracting disputes beyond what has appeared in newspapers."

Back in World War II, a senator named Harry Truman earned a national reputation with his no-nonsense investigations of war profiteering. Mayer's disturbing article makes you wish "Give 'Em Hell Harry" was still around.

Discovering a Safe Haven

During Black History Month, it is worth noting -- as Smithsonian magazine has noted in its February issue -- that archaeologists have recently discovered a secret underground hiding place for runaway slaves beneath the Lancaster, Pa., home of Thaddeus Stevens.

Now nearly forgotten, Stevens was a radical abolitionist congressman in the 1850s and 1860s and the prime mover behind the 14th and 15th amendments to the Constitution, which guaranteed equal rights and voting rights to black people.

A bachelor, Stevens lived for 20 years with a black woman, Lydia Smith. She was ostensibly his housekeeper but he socialized with her and treated her as an equal. This led to a lot of gossip but Stevens didn't seem to care. Historians have long known that Stevens and Smith were active in aiding runaway slaves. But they didn't know, until archaeologists excavated Stevens's house in 2002, that the couple kept a secret underground room to hide runaways.

Alas, most of that house will soon be torn down to make way for a convention center.